You may know that the quality of your employees can greatly impact the value of your business, but are you aware how your customers are affecting your profitability? It is important for businesses to identify customers who may be challenging to work with or who may cause problems that could affect the business’s reputation, profitability, or operations. Here are some signs that a customer may be difficult or problematic:
Demanding or unrealistic expectations Customers who have unrealistic expectations or who demand special treatment or accommodations may be difficult to satisfy, and may require more time and resources than other customers.
Chronic complainers Customers who frequently complain or criticize may be difficult to please, and may have a negative impact on other customers and employees.
Late or non-payment Customers who consistently pay late or do not pay at all may cause cash flow problems for the business and mayrequire extra attention and resources to resolve.
Disrespectful or abusive behavior Customers who are disrespectful or abusive towards employees may create a toxic work environment and may harmemployee morale and productivity.
High maintenance Customers who require a lot of attention, follow-up, or support may require more time and resources than othercustomers, which can be challenging for businesses with limited resources.
Attracting the right customers is essential for the success and growth of any business. Here are some strategies that can help a business attract the right customers:
Define your target audience: It’s important to have a clear understanding of who your ideal customer is, including their demographics, interests, needs, and pain points. This will help you tailor your marketing messages and strategies to better appeal to your target audience.
Create a strong brand: A strong brand can help you differentiate your business from competitors and establish a unique identity that resonates with your target audience. This includes developing a compelling brand message, logo, color scheme, and visual identity that reflects your values and personality.
Provide high-quality products or services: Customers are more likely to return to a business if they receive high-quality products or services that meet or exceed their expectations. This includes focusing on delivering exceptional customer service and ensuring that your products or services are reliable, user-friendly, and effective.
Develop a targeted marketing strategy: A targeted marketing strategy can help you reach the right customers through channels that are most likely to resonate with them. This may include social media advertising, email marketing, content marketing, or search engine optimization.
Offer value and incentives: Offering incentives, such as discounts, promotions, or loyalty programs, can help attract new customers and encourage repeat business. However, it’s important to ensure that these incentives align with your overall business goals and are sustainable over the long term.
Monitor and adjust your strategies: Regularly monitoring your marketing and customer acquisition strategies can help you identify areas for improvement and make adjustments as needed. This may involve collecting customer feedback, analyzing data, or conducting market research to stay ahead of changing trends and preferences.
Overall, attracting the right customers requires a deep understanding of your target audience, a strong brand identity, high-quality products or services, targeted marketing strategies, value and incentives, and ongoing monitoring and adjustments to your strategies.
A presentation for Jim Hitchner’s Valuation Products and Services Wednesday, May 18th, 2022 1:00 – 3:00 PM EDT
Jeff got up from his hospital bed after missing most of tax season and felt better. So good that three days later he canceled the closing on his 7 employee CPA practice. Unfortunately Jeff spent the next tax season in the hospital too and did not have a practice to return to. While this sounds crazy and far fetched it happens all the time.
How do you keep your exit and succession clients from being Jeff?
Presentation Description: Starting and then following through – taking consistent forward moving action is the biggest issue with succession and exit planning. In this presentation we will review seven major pitfalls that reduce business value and at times stop the process altogether. Several of these are common errors made by professionals and several are traps into which clients commonly fall into. Emphasis will be on maximizing value while continuing to take actions to move the process forward. A simple exit plan template will be provided to aid in initial discussions with the client and to prompt them to take the first steps. Click here for more details from a similar presentation.
You will gain a better understanding of what it takes to get your clients to start – and successfully finish – a business or practice exit and succession plan. If you provide succession planning, would like to add this service, or are just thinking about your own plan, this presentation is for you. This presentation is designed for advisors of smaller businesses with revenues typically under $10 – 20 million.
“Daddy, I know how we get money.” Said my 3 year old son in his very deep voice.
“How?” I asked.
“We go to the ATM” he said.
Well my son was right. Prior to everything being cards and phones it was important to have cash and I would get my cash at an ATM at my bank. Often this was on the way to a family dinner and clearly my son was watching and absorbing.
The ATM is really a lot like a small business. You use a process to obtain money. Also like your business – think about how disappointing it is when the ATM does not work? Again, consistency creates comfort with an ATM and reduces risk (aren’t those two the same thing) with your business. The more profits or money with the least risk increases small business value.
How can you turn your business into a reliable ATM and increase your business value?
Hire great people and train them and grow them.
Work on your systems. “A great system is when ordinary people get extraordinary results every time.”
Develop tracking systems for key metrics and things like collections that are important but easy to ignore.
The less your business needs you the more valuable it is.
Implement how you can make your company more “Sticky.” Sticky means your customers stick around. Repeating work like taxes, integrations simplifying things for your clients but creating hassles to move (think about how you bank may have done this to you?) Service contracts so you are the first call, etc.
Investigate the profitability of your different products and services. Sell more of the high margin ones.
Develop a marketing and sales system that is independent of any one person. Which would you rather own? A fast food restaurant with no customer alliance to staff or a restaurant where everyone comes because of a wonderful Maître D’?
Ways to make your business run consistently like a quality ATM are endless. Change and technology make sure this is a job that is never complete. But, when you build your business to run like an ATM you will have more fun running it and you will increase business value.
I’m a JD, CPA and Certified Valuation Analyst, and I know that valuation is an art. To find out more about professional valuation services for your business, contact me to learn more.
When these lessons are implemented by management, government contracting company’s business profits, resiliency, and business value all increase.
As a business valuator and business broker who spent much of his career in the Washington, DC area I have frequently worked with government contractors. For a list of industries we have prepared valuations for click here. Technically, government contractors are not a specific category of business. They get lumped into their specific underlying industry. Yet, government contractors are usually quite different from companies serving private industry.
Here are a few things I have learned.
LESSON 1 – Obtain Transferable Long Term Contracts
In order to increase transfer or business sales value long term contracts that can be transferred to a reasonable cross section of buyers should be sought out. Many government contractors have status certifications. These status certifications are important for obtaining work in a competitive market. But, if the focus is on building value also consider the effect if the status used to obtain the contract are difficult to transfer to a larger organization with capital to invest. 8(a) because of it’s limited life can be a great way to grow a firm but check carefully about transferability if you are counting on 8(a) contracts to increase your business value.
LESSON 2 – Obtain Profitable Fixed Fee Contracts
Fixed Fee contracts where you can make a profit are preferable to Time and Material contracts. Typically there are two types of contracts, fixed fee where you take the risk of the cost of performance. But, you also get the benefit of a larger profit if you can do the work for less cost. When properly managed by a government contractor that knows their costs fixed fee can be much more lucrative. Time and material allows a specified mark-up above costs. While these are safe, unless they are very large they cap your profitability at a low rate and frankly, small dollars.
LESSON 3 – Obtain multiple vehicles (contracts) to facilitate growth.
Many small government contractors win one award and think they are fine. But this leaves the company susceptible to contract termination. Contracts can terminate for many reasons often that have little to do with your performance. Government contracts can take years to obtain so set goals and begin working on this now. (Need a free goal setting / planning system, click here) Over time obtain multiple contracts so if one terminates the company has work and is still in business.
LESSON 4 – Take 8(a) contracts anyway
Due to the profitability of the right 8(a) contracts it may be prudent to continue obtaining them even if they are not transferable. Lets face it, earnings / money in your pocket today is always good. Yes, Lesson 1 is important but so are profits today. But, do not take 8(a) contracts if better less restricted contracts are available. If using this strategy both save some of the profits and look for non-8(a) work for when graduation day comes. (SBA statistics indicate that over 60% of government contractors do not survive 8(a) graduation. Don’t join this statistic.)
Obviously leadership, team building, hard work, and a little luck play a HUGE role but the four lessons shown above when properly implemented will increase business value.
Questions, want to know more, contact Gregory R. Caruso, Harvest Business, LLC, t/a The Art of Business Valuation.
Improved listening will Improve Your Leadership and Sales Results Improving Business Value
Roberto constantly meets with prospects and in machine gun fashion proceeds to tell them why he is the best tax accountant (you could put contractor, banker, auto shop….) and how he will save them money. Most politely listen and then, after 45 minutes to an hour politely find a way to leave the meeting without a full proposal or commitment to work with him.
Contrast this with Cynthia who briefly explains that she would like to address the prospect’s specific needs therefore it is best for her to start with some questions. She then proceeds to ask questions and listen in order to carefully assess their needs, budget, likely competitors in order to put together a succinct plan of action to address their specific problem. Most of her meetings result in an engagement.
Clearly an effective sales increases business value by improving the resiliency of the company.
Below is Cynthia’s secret to success –
Listening is a lost skill. It is through listening that we can truly understand others. People long to be listened to therefor effective listening will improve all your relationships and increase your value and your business value to your clients and others important to you.
What we think we “know” often gets in the way of true understanding. This happens in our businesses and in all parts of our lives. For instance, every now and then my assistant comes to me with a great idea, yet I “know” she is going to have a complaint, usually about technology. My knowing does not help either of us. Do situations like this happen to you?
A few steps to listen better:
Recognize that you have a “view.” Sort of like if you put pink glasses on. For a while everything seems pink. Then you get used to it and do not see it but it is there. That is one version of a view. My knowing as explained above is another version of a view. We all have views of everyone we “know” and almost instantly of everyone we meet.
Consciously let your view go. While doing this take 3 deep breaths and exhale slowly.
Ask your question or let the other person speak.
When they speak just listen to them very intently. Do not think about your next question or your response. Just listen.
While listening note the tone of their voice, their body language, and facial expressions. Pay attention to what is being said and what is not being said.
One more time – Listen to the answer carefully. Do not be thinking about your next question. Your next question will be better if it comes directly out of the answer just given. You can take a moment or two and think between questions. It will be interpreted as you are really listening and absorbing. Everyone likes being listened to.
Seek the answer behind the answer. What is really driving the results you see? What could change those results positively and negatively? The child’s question, “why” is remarkably powerful for digging deeper.
Listening attentively means that besides noting the response, summarize, paraphrase, and ask new open ended questions to draw out answers. If an issue is emotional in nature, empathize. Work with the person. Develop a relationship that will foster greater openness with you.
This listening skill takes an incredible amount of effort if it is not your habit. But, if you practice and train and become good at listening you will improve all your relationships including leadership and sales raising your value to all. This will improve both your personal value to your clients and your business value.
Most accountants and related professional practices fail to plan for their business or practice succession or business exit. This is a tremendous missed opportunity! Fortunately for them most accounting practices perform bookkeeping, audit and/or tax work which is reoccurring and therefore has value.
But, perhaps they do not get the price and terms they would like, fair treatment of your employees as you transition, and other factors that can be obtained – with planning and focus.
I have developed the below presentation – “7 Pitfalls to Succession and Exit Planning for Accountants and Professionals.” This was recorded at the 2021 Attorney CPA Association Conference. A summary of the Seven Pitfalls below the video highlighting high level concepts but not nearly all the details on the video. If you would like assistance with a valuation of your business or help in structuring a plan please contact us.
7 Pitfalls in Exit Planning for Accountants and Practice Owners
7 Pitfalls in Accounting and Professional Practice Succession and Exit Planning
The Laws Of Gravity Do Not Apply To Me – We all get in our own way. Get out of your way, start, do it. Most of us enjoy our practices and want things to stay the same. We also tend to believe, or at least act like we believe today is going to continue forever. But it does not. Do not be the professional who’s practice dissolves due to sickness or injury during tax season. TAKE ACTION NOW.
Your ATM Is Out Of Service Too Often – You business needs to be easy to run, predictable, and profitable. A lot like an ATM which has a simple system that produces money. Think how upset you used to be (back when you needed cash) when the ATM did not work. Your practice is the same way. Buyers become very concerned when things are not good and getting better.
There Are No Options – There are many exit options but most take five to seven years to fully implement. Start early. In fact, incorporate it into your annual planning sessions with your key staff.
Deloitte Is Going To Buy Me – Know your best buyer. Many partners and owners believe that they will be acquired or merge with a much larger firm than is likely to happen. (Right now with roll-ups in the accounting space that may happen but it is not the normal state.) Reach out to firms you think might acquire you or that you would like to have acquire you and go to lunch and discuss you far off succession plans. Ask them questions about what they will be looking for. Learn who your best buyer is and what they want and do not want.
It’s All About The Numbers – It absolutely is about the numbers but don’t discount business culture. But, in most accounting and professional practice transitions it is also about the people. Your people staying and being productive and excited and the people you are likely to work for during your transition period. Make sure you get to know who these buyers really are.
Negotiating A Transaction Is Not Like Testifying – If going to market makes sense (or even for many internal transactions) the negotiation skills to get you your best deal (the one you want) requires making a vibrant market and then having negotiation skills. These skills are not always intuitive and like any skill are honed with experience.
DIY – Don’t Do It Yourself. People pay your high hourly rates for your expertise. You know you give great value. Don’t shortchange yourself on your future and the exit from your accounting or professional practice. Put together a team including a financial planner, lawyer(s), business improvement consultant (if needed), business broker if going to market, valuation expert.
Finally – Make A Plan – Make a plan with key tasks listed AND who is responsible with a due date. Review it monthly or at least quarterly. Start today!
For a very simple exit plan form / format you can prepare in 15 minutes send us an email today and we will promptly get one to you.
Gregory R. Caruso the presenter and author of the above article has spent 35+ years putting together transactions and valuing businesses. Have a question? Reach out today.
